>> this is bloomberg daybreak: europe and i'm tom mackenzie in london. asian stocks slip for a fourth session as traders dial back bets on fed rate cuts while oil climbed to its highest on new

u.s. sanctions against russia. and china's annual trade surplus hitting a record close to $1 trillion. jamie dimon says tariffs can be a useful tool if used properly while we are told by someone from u.s. -- from ubs that clients should diversify. rachel reeves returns from china after a week in which markets pummeled u.k. assets. good morning. happy monday. another day, another reigning end of that surround the fed, just 28 basis points priced in,

just one interest rate cut expected in 2025 after the jobs data friday came and hotter than many expected with the unemployment rate going lower and a total jobs number coming in at 256,000. you saw the selloff in bonds again friday, markets readjusting and equities stateside sold off heavily friday. there's been a challenge session in asia as well. ftse 100 futures pointing lower, s&p futures around the selloff friday currently pointing lower by .4%. nasdaq 100 futures looking to lose 125 points. the treasuries we focused on are not trading today because japan at least for the moment is closed for a holiday. treasuries will open for trading later in the day. focusing on euro-dollar and the pound.

that surround further pound weakness are being made. further weakness from sterling as we await the speech from the chancellor, under pressure given the market rout in u.k. assets last week. euro-dollar getting closer to that parity level helped by higher yields. brent is also a key story. the oil markets rallying on additional sanctions on russia. $81 a barrel on brent and gold trading at 2688. cpi and inflation data could be the next thing that moves these markets i mentioned it's been a challenge session in asia. avril hong standing by in singapore. >> absolutely painful if you look at the picture on asia equities the benchmark at the lowest since august and this is against the backdrop of elevated u.s. yields, greenback strength sapping appetite for asia stocks

at a time when they have already been facing pressure no thanks to the pain in chinese equities and add to that elevated oil prices and if you look at chinese stocks they have a much older way and raised -- erased those gains driven by the stimulus package last year and you are seeing how there is some expectation of the national team stepping in in the afternoon session. we will be watching for signs of that but ultimately despite these signs of support the pboc governor talking about proactive policies, chinese exports rising to a record given frontloading, not helping given the tariff and stimulus uncertainties. flip the board because that's also likely to pressure not just chinese stock the chinese currencies as well and today we saw the pboc actually coming through with measures to broaden support for the chinese currency

so it was a strong fix and we also got verbal intervention. these are among the tools they can use but what was interesting was its tweaking of capital controls, allowing firms to borrow more from overseas it remains to be seen how effective this will be because there's ultimately an unwillingness to lend to chinese companies. it was not just the chinese currency hit but this was also a day where we saw the asia dollar index, a gauge by bloomberg of asia currencies excluding the yen, slipping to the lowest since 2006, the rupee also at record lows so we are watching out for intervention from central banks in the region and some of our analysts have already pointed out that for the likes of them it is not just about the levels but about curbing volatility for the yen. the weakness has been exacerbating important

inflation. we are watching for a big speech from the boj deputy governor tomorrow and potentially any signs of shifts in the inflation outlook this is what we are seeing across the board. >> avril hong in singapore. thank you. we will be watching to see if the national team does that later. traders are looking ahead to u.s. inflation data. wednesday could be the next big day as far as how markets adjust to inflation expectations, expected to cool only slightly against the backdrop of a resilient labor market and a strong economy. let's bring in valerie tytel. are you hearing anyone mentioning the h word when it comes to the fed? >> we are getting close to hearing from a major bank calling for a hike, the bank of

america saying cuts are so 2024. they are moving the conversation to hikes and they see no more cuts left on the table in 2024 and cut expectation from barclays and jt -- and j.p. morgan and goldman sachs removing one were cut from their forecast. the conversation is how close are we to that threshold to hikes? many economists think we need to see a resurgence in inflation, maybe core pce breaching 3% to get that kind of narrative change but if you flip and see what's been going on in the equity market, it is not pretty. we saw that 11 basis point rise in those front end to your yields and that's been sinking the equity market overnight, down .4% after that slide on friday. >> we have the inflation data out on wednesday. above and beyond the u.s. inflation story, what are the other risk events on the table? >> a close inauguration day for donald trump due to take place

seven days from now. the market is bracing for any more leaks on the tariff story so watch out for how the dollar reacts. that's mainly been traded by the fx market in the dollar index hit fresh highs overnight and we have heard many other comments about terrorists, one of which being last week we heard from governor waller saying he does not think tariffs are inflationary. maybe they are getting more excepted by the mainstream. we heard from jamie dimon, maybe throwing his hat in the ring for support for these tariffs. >> they are a tool that could help resolve things. unfair competition, national security issues. any tool that is missed use can do damage. >> so watch out for any further dollar strength if we get further links -- leaks on the tariff story seven days away

from inauguration day. >> jamie dimon giving his views on tariffs. valerie tytel, thank you. ubs's president and head of global wealth management says it will be key for clients to diversify investments amid political tension and economic instability. he spoke to us exclusively at the ubs greater china conference. >> we have started to see a commitment of china towards the economy and we have started to see that economic policy come to bear. everybody is waiting for march. we will see what the next steps around the more proactive fiscal stance will be in china. that will be as relevant as what the u.s. does. >> him speaking to the team on the ground at the ubs china conference. checking some lines crossing in the last minute or so from the

ecb saying inflation pressures will continue to ease this year. they are saying we do not want rates to remain high for too long. we need to ensure interest rates follow a middle path so some lines crossing from the ecb currently at 102 euro-dollar and checking in terms of traders pricing around the ecb through this year. expectations you are going to get around 87. 91 basis points of cuts between now and the end of this year so still expecting as rates moderate in terms of expectations around the fed and the boe, the ecb is still fully expected to be on a cutting cycle. and we got a reminder of that from them saying that about inflation pressures a good oil prove a challenge to that

trajectory, hitting its highest in more than four months after the u.s. announced fresh sanctions on russia's energy industry. let's bring in stephen. talk us through the impact these sanctions have had on the global oil markets, the details, why are they proving significant? >> this is the first time the biden administration as their last sort of act is putting real sanctions across the board on russian oil. they have hit the insurance companies, two companies that handled 30% of the crude that comes out of russia and 150 oil tankers, much larger than the packages they have done and it will make it more difficult for russia to continue shipping crude as long as incoming president trump does not overturn it. some of the banks and analysts are saying this could affect

800,000 to just shy of one million barrels a day. that would affect mostly markets like india and china that were taking more russian crude and before this the biden administration was a bit more -- they were taking a step back when it came to russian oil. they did not want to cause disruption to supply and on top of that they put this price cap mechanism in place to reduce the amount of oil revenues moscow was making will keep -- while keeping the barrels flowing into the market. this was a turnaround at also a test for trump. >> given the action that we have seen and the fact that this is pretty broad-based and is having that impact, what are expectations when you are speaking to analysts in terms of how the oil story pushes forward from here in terms of pricing with brent now above $80 a barrel? >> there are two things the market will be watching closely.

one will be how effective are these sanctions? will they stay in place, actually reduce the amount of crude coming to the market? some say this could affect as much as 800,000 barrels a day coming out of russia. if that is the case you could see oil trend more towards $90. there is no expectation you are going to see a spike like we saw in 2022 after the war in ukraine began. instead you will see a ratcheting up of prices were maybe the market was not expecting that. the second thing you have to watch as iran and what trump does with it. trump has said he will put a tougher stance on iran and may be enforced sanctions that have been in place. they could also reduce the amount of oil coming out of that country further, another element pushing prices up but i have to say we have not heard any expectation we will see any of the big spikes like we saw.

>> some more likely a grind higher than a big spike. wti at $70 a barrel. stephen always with a finger on the pulse of these oil markets with the analysis. here's what else to be thinking about for the week ahead. tuesday we get the french p.m. outlining their agenda so that will be important given the pressures on the cabinet of france from both left and right so that agenda will be detailed tuesday. wednesday, earnings season kicking off with u.s. banks. we will be breaking those for you and we have the likes of goldman sachs and citibank all reporting and of course comments from executives in terms of the outlook will be crucial as well and friday we got euro area cpi, so inflation data out of the u.s. and then on friday the euro area's turn as we heard from philip lane saying inflation

pressures will continue to ease your we will see if the data on friday confirms that view from philip lane. coming out, the u.k. chancellor returning from china with a deal. the state of relations between london and beijing next.

>> welcome back. happy monday. traders in the options markets are preparing for the pound, possibly to tumble as much as 8% following last week's selloff across the u.k. markets. the pricing will be unwelcome news for rachel reeves as she returns from her trip to china. lizzy burden is here. did she get anything out of a

trip that turned controversial? did she come back with anything meaningful? >> 6 million pounds of deals. 600 million. >> either way, it's a pretty small number. >> it is. but she is saying the long-term benefits would be up to one billion pounds and of course growth a top priority of the u.k. government so the signal light here is that the labor government is focused on long-term economic growth she met with the chinese vice premier in beijing, officials agreeing to deepen financial services length and reduce export barriers. we talked about whether would be possible to what the trade investment story from the geopolitical story and she managed to raise the issues about china's support for russia 's defense industry,

interference in the u.k.'s national security and human rights, so not need -- seeing the need to split the sides of the coin from each other. beijing really trying to shore up its relations with america's friends before donald trump returns to the white house so you have seen xi jinping on the charm offensive with japan, australia, india, doing what he can before another round of terrace kicks in and this visit is another part of that. >> did the market turmoil at home overshadow this visit? >> for u.k. reporters of course this is front and center at the moment. there had been pressure for her to cancel the trip. she responded that her fiscal rules are nonnegotiable, which basically acknowledges that if the office of budget responsibility when it comes back in march says she has no headroom she will have to make a choice between spending cuts and tax rises and she of course has

indicated her choice would be spending cuts. we'll have to see whether this messaging is enough to calm the markets. you talk about what the indications are for traders in the options market and 8% fall and stirring -- sterling potentially today and as you remember last week the 10 year gilt yield at its highest since 2008 so really interesting to watch the moves in the u.k. market at the open, but for the u.k. government, trying to move the focus on and today we will get a speech from keir starmer about ai, trying to for size how labor will grow the economy long-term. >> what is the significance of that ai strategy for starmer? >> he will promote this as a key area of growth, an action plan with 50 recommendations but the point is to have ai growth zones

where it's easier to have planning for data centers and special districts to be built and could use nuclear power them because we know it is energy thursday and it's part of this plan to grow the economy and harvest ai -- harness ai for public services. they want to attract technical talent to the u.k. but given the moves in the bond market, what the moves tell us is that investors have not much faith in the government's ability to manage debt so will investors be persuaded by these ambitions? >> lizzy burden, thank you very much indeed. that speech coming up later today detailing those aspirations around ai. our u.k. correspondent and anchor of the opening trade. we will have more in reeves paschi it visit to china later in the program and we will be joined by the chair of the british chamber of commerce in china around 6:45 a.m. london time.

jeff bezos's blue origin space team are counting down to the inaugural launch of their new mission. you can see pictures here of the blue origin mission feed showing a rocket on the launchpad at cape canaveral in florida it is set to launch later this morning. the timer ticking down to around 30 minutes and 26 seconds. we will bring you that when it happens. this is blue origin's new space rocket that will be going with a testing satellite and with the aspiration of landing on a drone ship in the atlantic ocean. we will bring you that launch if and when it happens. this is bloomberg. ♪

♪♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪

>> welcome back to bloomberg daybreak: europe. at least two rounds of santa ana winds are expected to blast through southern california this week. they are expected to challenge fire crews struggling already to contain two destructive blazes and could force thousands more residents to evacuate. for more let's go to benjamin. what is the latest on the ground? >> los angeles and -- los angeles is facing some tough challenges again. there was a brief respite over the weekend that allowed crews to contain a fire but the national weather service has issued some red flag warnings, some of their highest alerts, warning of worsening conditions

in some counties of los angeles and part of that was the warning of the risk of rapidfire spreads so it is certainly going to get more challenging from tuesday morning onwards. at least 24 dead at the moment. still over 100 thousand people under mandatory evacuation orders, 12,000 structures that have been raised, accuweather has raised its estimate for damages and active -- economic losses to up to $275 billion. bear in mind there estimates usually taken direct and secondary losses and the two biggest buyers are still burning, largely uncontained and have scorched almost 30,000 acres -- 38,000 acres. >> so some remarkable statistics that concerning leora levy to rise from here. what is the biggest worry right now? >> the biggest worry is the

winds, the strong winds make it harder to fight fires, spread flames and embers and etches stretches fire crews and their efforts to combat the fire and when you take into account that the palisades and eden are still largely uncontained so it will stretch resources. the national weather service is saying we probably won't see the windstorm we saw a early last week and that prevented firefighting aircraft to fly in combat fires so we won't see that but it will make it harder for the crews from early tuesday morning on an for the next 24 hours after that it will be a tricky and challenging period for los angeles. >> what do we know about the economic costs of this disaster that as you just detailed for us continues?

>> we had a few estimates. accuweather raise their estimate to $275 billion. the other day they discussed wages lost and supply chain disruption. jp morgan last week, talking about insurance losses, so it's big and likely to get bigger. >> excellent update. thank you very much. coming up, the bond market. what is that for the equity markets? this is bloomberg. let's go boys. the way that i approach work, post fatherhood, has really been trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families, like my own. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

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>> this is bloomberg daybreak: europe. these are the stories that site your agenda. edge and stocks headed for a fuller -- a fourth session. oil climbing to the highest in more than a month so a new u.s. sanctions against russia and china's annual trade surplus hitting a record close to $1 trillion. jamie dimon says tariffs can be a useful tool if used properly while iqbal kohn says clients should diversify amid economic instability. rachel reeves returns from china, hailing deals worth 600 million pounds after a week in which markets pummeled u.k. assets. and u.k. assets will again be under the spotlight and the pound under pressure as traders ramp-up that. european stock futures pointing

lower by .3% and ftse 100 futures looking to lose 12 points. and nasdaq 100 futures down currently by .5% and the jobs data of friday with 250 6000 additional nonfarm payrolls added in an unemployment moving and dialing back expectations and the bank of america saying they are doing with no more cuts says the bank of england. with the tenure still in focus, given the jump we saw on friday. treasuries not yet trading because japanese markets are closed. the pound at 120 one, down .4%. brent rallying close to 2% and gold trading a little higher at 2690.

so the u.s. government bond yields have been surgical a level not seen before the global financial crisis and the message from the markets is getting clearer by the day. get used to it. let's bring in valerie tytel for the analysis. is this the real higher formula that some have been forecasting? >> the higher for longer we have heard so much from the fed, it seems we are feeling the effects of that not in the front end of the bunker but long-term interest rates hovering around 5% in the u.s., which seems to be something the market could have to live with not just temporarily but for an extended period of time so perhaps it's more about higher for longer when it comes to long end treasury yields.

we have seen an interesting dynamic and normally when the fed enters into a cutting cycle that happens alongside the u.s. economy turning around and we see a big rally in bonds with yields headed lower. maybe you call it a soft landing, the fact that the fed is cutting into not a recession but into a slowing economy, seeing these yields rise alongside the fed cutting and that is something we have not had to live with. >> that is really economics 101 being thrown out of the window? >> it is interesting to see how global economies will absorb these higher yields. many are pointing not to consumer debt being a problem but public debt, these highly indebted nations across the world, a lot of which was being exacerbated by the response from covid and you have seen debt to gdp ratios rise.

you have higher yields alongside a burden of debt and it poses these questions about fiscal dominant and to that point we have seen fiscal dominance talk about -- talked about in the developed markets but it's also being talked about in emerging markets. we have seen many of their central banks noting that their ability to conduct monetary policy is being hampered by the fact that the governments are sitting on such a large debt pile that they cannot hold rates high enough to bring inflation back to target without imperiling the debt trajectory of their own governments. >> in the markets have been holding some of their feet to the fire. valerie tytel, thank you very much indeed. you can get the big take on bloomberg.com and the terminal. the global head of ubs wealth management says that beijing's

more proactive fiscal stance will be as relevant this year to markets as what happens in the u.s.. he also told us how he sees a slower pace of fed rate cuts affecting those investment decisions. >> generally, the entire rate curve and everything around policy as well as inflation has been a key topic and has reignited again with the rate curve and there was a bloomberg headline just this morning around scratching 5% in terms of 10-year yield's but having said that we still expect a gradual reduction in rates but we will have to work through and scenarios. we are waiting for an inauguration. we will see what the u.s. administration will be doing. we believe there will be continued rate cuts albeit maybe

a bit slower than anticipated but this is something we will have to work through. >> you just said the trump inauguration. he has threatened a lot of issues, more protectionist american policy including tariffs and perhaps more debt issuance. the deficit has been a problem in the u.s. and how do you see that impact in china in particular? >> if you step back again and look at some of the macro challenges in china, the real estate sector, local government debt and consumer demand, we have started to see a commitment of china towards the economy and we have started to see that economic policy come to bear everybody is waiting for march. we will see what the next steps around the more proactive fiscal stance will be in china that will be as relevant as what the u.s. does.

>> you think that's what's going to happen in march? because we have some false starts. what would you like to see? >> i think we would like to see continuous and sustainable steps towards addressing some of the more macro and fiscal challenges china faces >> will 2025 be tougher than 2024? >> there is always this question of one year being tougher than the other. i have learned don't always follow consensus. that was one of the things we learned when we went to dabo's. just work through scenarios. one of the great things about gcc is figure out what is out there, what are the nones and what could be the big unknowns and how are you going to factor that in? >> one of the key things we are here to deliver is sustainable performance and impact for our clients and we do that by making

sure there investment portfolios are all weather portfolios and we work through this with our clients making sure they are diversified globally as much as by sector and theme. >> the ubs asia-pacific president an head of ubs global wealth management speaking exclusively to bloomberg tv. let's continue the conversation about what's been a rocky start to the year for global markets with alexandra and we will talk about what's happened in terms of the equity markets wiping out the games that have come three year to date for u.s. stocks and a lot of that down to higher yields. where are we in terms of this market correction on the selloff of treasuries? >> that's a good question and i think it's the million-dollar question that nobody knows but to me it feels like the yield rises have been to the point where it's becoming more

difficult for the market to sustain their valuations. and i think some of the strategists were talking about this as we approached 5% yield on treasuries. we will be focused on how long-term term valuations in equity markets will reflect that and i think so far in 2024 the market has been so resilient and we have seen a rise in rates since september and equity markets have been ignoring it but i think we are getting to the point where it's the danger zone so pullback is something that is not surprising for me. i think volatility will stay here and for active managers it's not a bad environment, something i'm doing on a day-to-day basis now but in

terms of the equity pullback may be i'm waiting for some levels where we can get back into equities but it is too early. >> so we are close to that danger point. what are the levels we are looking at? >> 5%. we are all talking about 5% yields. some people were talking about 6%. >> i think the level of yields at this level but with the carry higher you need to see the rates to go 50 or 60 basis points higher to start losing money on the holding period and for that, for you to lose money on 10-year yield's, they need to say it -- to stay there on a sustained basis which i don't think is going to happen. the dynamic in the market is such that i think we are going

to get continued selloffs but i think the valuations are coming to the bond market >> where does the u.k. said in that danger zone? does this stop -- the spotlight remain? >> i'm positive on yields not because of the dynamic in the fiscal but mostly on valuations because they have gotten to the point where it's quite attractive, especially in the long end and we have been seeing in the last couple sessions that even when we saw some really strong payroll members coming in in the u.s., the gilt market kind of sustained its levels which means that there's a lack of sellers and maybe we are not getting a lot of buyers stepping in yet but at these levels i think it makes sense to start piling in to some of the long end of the gilt market.

>> so maybe tens or 30's but there's a sense of caution i'm picking up from you. >> yes. when the market actually starts moving, it's difficult to start -- to stop the dynamic in the momentum. >> do you think we are underestimating what the boe will need to do? there are some suggesting that the bank of england will have to cut more than markets expect -- expect. >> i agree. there are parts of the inflation, services inflation is quite sticky, but that is more structural or specific to u.k. market, the housing market or rents are very high. but underlying the labor market's weakening we are

starting to see some weakness in certain parts of the economy that maybe is not necessarily in the data yet. >> is the next movie cut or a hike for the fed? >> cut. >> second half of the year? >> probably. our economists think the second half of the year. >> alexandra, thank you. alexandra, fixed income fund manager at invesco seeing opportunities in the long end, still sees the fed cutting but not until the second half of this year. bank of america have change their view to expect zero additional cuts. the u.k. chancellor returns from china with deals roughly worth 600 million pounds. we will discuss the state of relations between london and beijing next. this is bloomberg. ♪

>> welcome back. some lines dropping according to reports from reuters. the u.s. has found china unfairly dominates shipbuilding. this was a probe initiated in 2024 by the u.s. trade representative. and the findings are again according to reporting that china unfairly subsidized its ship industry, unfair financial support for for informs -- for foreign firms. the report has found china unfairly dominates the shipbuilding industry. now to the maker of iphones, apple and its fortunes in the chinese market. shares are lower after an analyst said it expected iphone shipments would fall short of wall street estimates.

a securities analyst sees 220 to 220 5 million iphone units shipped in 2025 compared with a consensus of about 240 million or more. apple shares fell in u.s. trading last friday after the news. we keep track of that story for you as suppliers face the pressure. the u.k. chancellor is returning to the u.k. from china where she reached deals worth 600 million pounds to the british economy over the next five years. reeves went ahead with the trip despite last week's selloff across u.k. assets let's bring in julia fisher, chair of the british chamber of commerce in china joining us from beijing. we talk about the 600 million pounds worth of deals. was that the significant number that you and your members were looking for? what of consequence came from

this visit? >> i think first of all that it happened at all is significant. this is the first time in six years we have seen one between the u.k. and china and the fact that it happened so quickly and caught on the heels of david coming to visit is significant but i think we should set expectations. it's really around commitments. in terms of those, there was a lot of stuff around financial services. we have seen openings in terms of quotas and licenses for hsbc, aberdeen, ascent capital, discussions around green bonds in the u.k. from the likes of the bank of china and discussions around the pension fund so a lot of positive stuff happening around u.k. financial services that will have an impact but it was also interesting to see what it might mean for small business in the u.k., particularly on food and alcohol.

you have seen openings for pet food, whiskey and the long-awaited opening up of new markets in china. >> that's interesting in terms of the financial services sector and the potential benefits that could come through. you have been on the ground there for around two decades. how would you characterize relations between the u.k. in china right now? >> we are at an incredibly interesting phase and i say that aware that donald trump is about to come into power but ultimately it feels like there might be an opportunity for the u.k. to chart a slightly different path. it's pretty obvious at the moment that we have not put tariffs on electric vehicles and i know that was discussed between rachel reeves and her counterparts in beijing so there are potentially opportunities to carve out a different way of engaging with china and certainly something we saw in our sentiment survey was increasingly british companies

are seeing opportunities to support chinese companies going globally. our financial services and legal services are world class and i think that is something where our members have seen real positivity this year and helping china to navigate the global landscape as it goes global. >> what are the remaining challenges that your members bring up for you when it comes to that market share and opportunity in china at a time of slowing chinese growth? >> it's not been an easy time. in our sentiment survey where we had over 300 businesses from across the country, this is the fifth year in a row that rich businesses say it's gotten more difficult to do business in china. i think some of that comes down to market access and regulatory issues but it's also just an incredibly competitive market and really low consumption and significant challenges to the chinese economy. the sectors where we were most

optimistic where retail, advanced manufacturing and creative but for obvious reasons at the other end of that you're seeing challenges for anyone involved in the property sector and energy as well. >> are you seeing a greater willingness when you interact with your counterparts to open doors and to try to attract that fbi that we know china once? and is there softening as they try to address the challenges of that economy? >> over the last two years, post-covid, are access has been fantastic and there's been a lot of desire to discuss issues but i think sometimes the gears do not quite fit. we are sitting in a meeting room saying we want to talk about market access and regulatory change and they are in the same room saying what about fbi and investment in the cycle seems to be continuing so at the moment

not just on a chamber level but also at the government level use all over the weekend, the question really is is china capable of kind of continuing reform, opening up real market access for international business or is it unable to fight its search towards protectionism and some of those bigger challenges geopolitically that inhibit foreign business in china? >> julian fisher, chair of the british chamber of commerce in china, really important context on this visit and how the u.k. could potentially carve a different path in terms of that relationship versus the trump administration incoming and arguably the european union. there is putting more coming out. this is bloomberg. ♪

>> welcome back. check in on a chart that reflects the unwinding of the trump trade. part of that is down to reassessing how far the fed will go. bank of america saying no more cuts this year, even suggesting the next move could be a hike. part of the risks around tariffs of course as well and this additional debt and deficit concerns and here you can see the russell 2000, one of the biggest beneficiaries on expectations of tax cuts from the incoming trump administration has unwound those gains and is now a negative territory. the s&p is not far off so that trade has deeply unwound. does that have further to go given the yield you could now be ticking up on a 10 year treasury versus the earnings yield of the s&p, which is about 1% below that 5% level and do you march higher above 5% and start

targeting six? big question for the markets as you look at the pressure on u.s. stocks. further pressure on sterling today. markets and traders increasingly bet you could get below 120 on pound versus dollar, about 2% below where we ended friday, some putting on bets that maybe you get below 112, which would be a move lower of about 8%. rachel reeves hopes to address this this week. next up, we speak exclusively with the bank of findling governor and governing council member olli rehn live in hong kong. the opening trade is next. this is bloomberg. ♪

kriti: good morning from london, i am kriti gupta alongside guy johnson and lizzy burden another blowout sending yields of the dollar's ring as p